Mexican drug cartels tap counterfeit market

Immigration and Customs Enforcement officers work to determine what items are counterfeits and thus able to be seized during a raid Sunday at the Fox Plaza Flea Market. (Victor Calzada / El Paso Times)

Mexican drug cartels have expanded their grasp into the counterfeit merchandise market, including in the El Paso area where some vendors were reportedly charged a "quota" to be allowed to operate, federal law enforcement officials said.

The raid was part of an investigation by U.S. Immigration and Customs Enforcement Homeland Security Investigations, known as HSI. There have been no arrests, officials said Wednesday.

The sale of cheap "pirate" CDs and DVDs, fake designer handbags and bootleg brand-name clothes and sneakers has been a long-standing business at flea markets and mom-and-pop shops in El Paso and Juárez.

"It's become such a lucrative business that our El Paso HSI agents have information that the drug cartels are now investing in this type of crime," said Leticia Zamarripa, a spokeswoman for ICE.

In Mexico, drug cartels are thought to have muscled into the "pirated" goods market.

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It is part of a pattern in which cartels have diversified beyond drug trafficking to other criminal ventures, including extortion and immigrant smuggling.

In the El Paso-Juárez area, vendors of counterfeit items, according to HSI agents, are reportedly charged a tax, or quota, that is collected by the Barrio Azteca gang. The Barrio Azteca gang is the dominant gang in the region and collects a similar tax from street-level drug dealers.

The Barrio Azteca, or the BA, is allied with the Vicente Carrillo Fuentes drug organization, better known as the Juárez drug cartel.

"Our intelligence indicates that, at least in this (El Paso-Juárez) area, the BA collects a quota for the VCF for allowing counterfeit vendors to operate," said Oscar Hagelsieb, HSI assistant special agent in charge in El Paso.

"Our intelligence also indicates that this is based on long-standing arrangements made by the Juárez cartel," Hagelsieb said. "The Sinaloa cartel has yet to establish a strong enough footprint in this area to wrestle control of this market from VCF."

The Sinaloa and Juárez cartels have been battling for control of the Juárez region for more than four years in a war that has left more than 9,500 dead in Juárez.

Before Hagelsieb was assigned to the HSI's El Paso office, he was an ICE attaché in Monterrey, Mexico.

In Monterrey, the Zetas cartel not only collected quotas from vendors but actually took over the counterfeit market. Key Zeta members were given a certain specific market -- for example, DVDs -- as a reward, Hagelsieb said in a statement.

El Paso law enforcement sources had no indication local counterfeit-goods vendors were being forced to pay a quota but said that it would not be a surprise because gangs are involved in any scheme that makes money.

ICE officials would not discuss any direct cartel links to the alleged counterfeit items seized at the Fox Plaza swap meet because their investigation continues.

At the swap meet, HSI agents seized more than 7,000 DVDs, more than 10,000 CDs and more than 1,700 other items, such as sports jerseys, handbags and tennis shoes, Zamarripa said. The items have an estimated retail value of more than $900,000.

"We know that a lot of the proceeds from counterfeit merchandise goes to fund criminal organizations," Zamarripa said. " É As consumers, we have to stop to think and consider where that money is going and who we are supporting by purchasing these items."

The counterfeit business is a multimillion-dollar industry in the U.S. involving bootleg items as varied as clothing, perfumes and medicine. The internet is a hot spot for sales, and China is the number one source of pirated goods seized in the U.S., according to a report last year by U.S. Customs and Border Protection and ICE.

ICE officials said counterfeit merchandise is often substandard and in some cases can pose a risk to health or safety.

"It is also an economic crime," Zamarripa said. "By supporting this type of illegal activity, we are robbing Americans of legitimate jobs."

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